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TMI Blog2019 (10) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... lier order of this Tribunal passed in the identical facts and circumstances of the case, penalty levied in the present appeal U/s 271AAB of the Act is deleted. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ied penalty at minimum rate of 10% of the undisclosed income. She has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as relevant material on record at the outset, we note that this Tribunal in case of Shri Surajmal Bansal HUF and others including Shri Navneet Bansal Vs DCIT who is husband of the assessee, has considered the issue of levy of penalty U/s 271AAB of the Act arising from the disclosure and surrender made by the other family members of the assessee under the same search and seizure action conducted on 05/02/2015. In the case in hand, the surrender was made in respect of entries found regarding the advance in names of certain persons for land and otherwise which are identical entries as in case of other family members and particularly in the case of the husband of the assessee Shri Navneet Bansal Vs. DCIT. The Tribunal vide order dated 08/04/2019 has discussed this issue in para 11 to 21 as under: "11. We have heard the rival contentions and perused the material available on record. This Tribunal is taking a consistent view that levy of penalty u/s 271AAB is not automatic in nature but the AO has discretion to take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as may be applied in relation to penalty under this section which means that before levying the penalty, the Assessing officer has to issue a show-cause granting an opportunity to the assessee. Thus, the levy of penalty is not automatic but the Assessing officer has to decide based on facts and circumstances of the case. Similar view has been taken by the various Co-ordinate Benches and useful reference can be drawn to the decision of the Co-ordinate Bench in case of ACIT vs Marvel Associates (supra) wherein it was held as under: "5. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. During the appeal hearing, the Ld. A.R. vehemently argued that the A.O. has levied the penalty under the impression that the levy of penalty in the case of admission of income u/s 132(4) is mandatory. The Ld. A.R. further stated that penalty u/s 271AAB of the Act is not mandatory but discretionary. The provisions of section 271AAB of the Act is parimateria with that of section 158BFA of the Act relating to block assessment and accordingly argued that the levy of penalty under section 271AAB is not mandatory but discreti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1). Section 158BFA(2): (2) The Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Chapter, may direct that a person shall pay by way of penalty a sum which shall not be less than the amount of tax leviable but which shall not exceed three times the amount of tax so leviable in respect of the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC: Provided that no order imposing penalty shall be made in respect of a person if- (i) such person has furnished a return under clause (a) of section 158BC; (ii) the tax payable on the basis of such return has been paid or, if the assets seized consist of money, the assessee offers the money so seized to be adjusted against the tax payable. (iii) Evidence of tax paid is furnished along with the return; and (iv) An appeal is not filed against the assessment of that part of income which is shown in the return: Provided further that the provisions of the preceding proviso shall not apply where the undisclosed income determined by the Assessing Officer is in excess of the income shown in the return and in such cases the penalty shall be impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty u/s 271AAB of the Act is not mandatory but directory. Accordingly we hold that the penalty u/s 271AAB is not mandatory but to be imposed on merits of the each case." 15. Therefore, we agree with the contentions of the ld AR that the levy of penalty under section 271AAB is not mandatory. In the instant case, it therefore needs to be examined whether there is any basis for levy of penalty or non-levy thereof and the same will depend upon the facts and circumstances of the present case which we shall discuss in subsequent paragraphs." 12. For the purposes of levy of penalty, what has to be seen is that whether the surrender so made, in terms of statement of the assessee recorded u/s 132(4) during the course of search, falls in the definition of "undisclosed income" which has been specifically laid down in terms of clause (c) of explanation to section 271AAB which reads as under: "(c) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions are recorded in a diary which is nothing but "other documents" maintained in the normal course, then it cannot be presumed that the assessee would not have disclosed the same in the return of income to be filed after the date of search. Another question that arise for consideration is whether the advances so given for purchase of land qualify as "undisclosed income" as per definition given in the explanation to section 271AAB of the Act. An advance represents an outflow of funds and what has been envisaged by the legislature while defining "undisclosed income" in section 271AAB is an inflow of funds which has not been recorded in the books of accounts or other documents on or before the date of search and not an outflow of funds. Further, the deeming fiction so envisaged in section 69 and 69B cannot be extended and applied automatically in context of section 271AAB which contains a specific definition of undisclosed income. An identical matter has come up for consideration before the Tribunal in case of Rajendra Kumar Gupta vs DCIT (Supra) wherein it was held as under: "21. During the course of search, a note book (diary) has been found referred to as Ann. AS wherein there a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1AAB. It is a well-settled legal proposition that the deeming provisions are limited for the purposes that have been brought on the statute book and have therefore to be applied in the context of provisions wherein they have been brought on the statue book and not otherwise. In the instant case, the deeming provisions contained in section 69 and section 69B could have been applied in the context of bringing to tax such investments to tax in the quantum proceedings, though the fact of the matter is that the AO has not even invoked the said deeming provisions in the quantum proceedings. Therefore, even on this account, the deeming fiction cannot be extended to the penalty proceedings which are separate and distinct from the assessment proceedings and more so, where the provisions of section 271AAB provide for a specific definition of undisclosed income. Where a specific definition of undisclosed income has been provided in Section 271AAB, being a penal provision, the same must be strictly construed and in light of satisfaction of conditions specified therein and it is not expected to examine other provisions where the same has been defined or deemed for the purposes of bringing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave duly considered while levying penalty @ 10%. In the result, we confirm the levy of penalty @ 10% on the undisclosed income of ₹ 49,62,554. 18. Regarding levy of penalty on cash advances of ₹ 1,00,50,000 towards purchase of land basis the statement of the assessee recorded during the course of search, the facts and circumstances of the case are exactly identical and similar contentions have been raised by both the parties. Hence, our findings and directions contained in ITA No 124/JP/2018 shall equally apply in this case and following the same, the penalty so levied on such cash advances is hereby directed to be deleted. 19. In the result, the appeal of the assessee is partly allowed. ITA No. 126-127/JP/18 20. In ITA No. 126/JP/18, the AO has similarly levied penalty on cash advances of ₹ 2,05,00,000 towards purchase of land basis the statement of the assessee recorded u/s 132(4) during the course of search. In ITA No. 127/JP/18, the AO has levied penalty on cash advances of ₹ 2,25,00,000 towards purchase of land basis the statement of the assessee recorded u/s 132(4) during the course of search. Both the parties fairly submitted that the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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